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3 Reasons the Dow's Soaring Today

The global economy keeps roaring.

Shortly past midday, the Dow Jones(INDEX: ^DJI) is up 1.38% and has climbed more than 3% since dropping to below 12,700 last week. Unlike yesterday, when the Dow rose while other indexes like the S&P 500(INDEX: ^GSPC) and Nasdaq tumbled, today's rally is broad-based. Across the Atlantic, the FTSE 100(INDEX: ^FTSE) closed up 1.78%. Let's take a look at three reasons world markets are soaring.

Reason 1: Positive economic signsThe most notable economic sign today came courtesy of the IMF, which raised global economic GDP growth to 3.5%, up from a previous estimate of 3.3%, while also raising its 2013 estimate to 4.1% growth. Key growth projections include a 2.1% gain this year in the United States, a 0.3% decline in the euro area, and 8.2% growth in China.

Still, despite the better outlook, the IMF warns that conditions are still very volatile and that risks that can't easily be calculated remain. One such area of concern -- Spain -- conducted a successful 12-month and 18-month bond sale today that pushed yields back below 6%. That news was enough to temporarily ease investor concerns around the country that is trying to rein in its deficit and contain spiraling interest rate spreads. However, more long-term bond auctions set for Thursday will probably be more telling tests of Spain's future.

Reason 2: Good earnings, not great earningsCoca-Cola(NYSE: KO) is seeing the second-highest gains of all Dow components after reporting solid earnings that included 5% growth in worldwide volume despite slower growth in developed markets. Likewise, US Bancorp's and Goldman Sachs' reports buoyed the banking sector this morning. US Bancorp reported profits up 28% last year while Goldman Sachs' earnings fell. The results once again confirm the struggles of big investment banks relative to smaller regional banks. Earnings season will move onto technology tonight when IBM, Intel, and Yahoo! all report.

Reason 3: Volatile markets are backAfter a mundane start to the year, where big moves in either direction were uncommon, we've seen a series of big moves in markets recently. One needs to look no further than Apple(Nasdaq: AAPL), which plunged 4.1% yesterday and has now bounced back 3.9% today. While commentators have been quick to cite reasons for Apple's plunge, such as the Nasdaq's reweighting to include Texas Instruments, or carriers beginning to balk at subsidies, the real reason is most likely as simple as Apple being a huge winner across the year and taking a break. A string of income tax selling by funds reducing their exposure to a big winner could even be in play. The key point is that when markets start making bigger moves each day, corrections to each side become more exaggerated and with less reason.

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Author

Eric started at The Motley Fool in 2008 working in the Tech & Telecom sector. Today, he's the General Manager of Fool.com. You can follow him on Twitter to stay up to date with his tech industry analysis. Follow @bleekertech